Meijer at 1770 W. Lane Road in Machesney Park has requested a $1.78 million reduction in its property tax assessments. It’s one of the five largest challenges this year. (Photo by Kevin Haas/Rock River Current)

By Kevin Haas
Rock River Current
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ROCKFORD — This week a battle begins over some of the biggest property tax bills in the county.

The Winnebago County Board of Review will start to hear the largest complaints of overvaluation it has on the books, and that puts millions of dollars in property values and therefore tax dollars at stake.

The board holds hearings each year that allow homeowners and businesses to appeal the taxable value of their property in an attempt to lower their upcoming bills.

This year it’s grocery stores that have the biggest beef with tax assessors.

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Four of the five largest appeals belong to grocery store properties. Those four challenges alone represent nearly $7.4 million in requested reductions of taxable property values, according to data from Winnebago County Supervisor of Assessments Tom Hodges.

The board’s hearings, many of which are conducted virtually, happen with little fanfare in the county’s downtown administration building. But assessors say there’s a good reason you should care about the result: The bigger the reduction grocery stores and other major challengers receive the more other property tax bills increase to make up the difference.

“When these properties get lowered, all that does is shift the burden to the taxpayer,” said Jon Vaiden, Harlem Township assessor.

The reason other bills rise is because of the formula that determines how much in property taxes you pay. Government bodies decide the total amount in property taxes they’re going to collect in the fall. That number doesn’t change even when a home or business owner gets a major reduction in their value granted. Instead, the tax rate increases so everyone pays more to make up the difference. In some cases it can be just pennies, but it can add up for larger properties.

“It makes a huge difference when these properties, like these big box stores, take such a big hit,” Vaiden said.

This year’s four largest challenges came from three Schnucks properties — the ones in Roscoe, Loves Park and on East State Street in Rockford — and the Meijer in Machesney Park. The fifth-largest complaint came from Beloit Memorial Hospital, which for years has fought to have the value of its NorthPointe Wellness clinic reduced.

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There where also major challenges from Woodman’s and other Meijer and Schnucks locations in the county.

Supermarkets on top

The fact that grocery stores made up some of this year’s largest complaints is largely coincidental. Meijer has been at or near the top of the list in years past, so have manufacturing facilities, apartment complexes, strip malls and senior living centers. Last year, CherryVale Mall was at the top of the list as it argued its value was hampered by the coronavirus pandemic. AMC made a similar plea last year.

But grocery stores seemingly continued to thrive amid the pandemic, which made their status seeking some of the largest reductions surprising to Rockford Township Assessor Ken Crowley.

“I’m a little perplexed by why supermarkets have done this,” Crowley said. “They’re not working in unison.”

Crowley and Vaiden, however, do take issue with how some of the grocery stores have constructed their arguments that their properties were overvalued.

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Assessors determine the taxable value of property by comparing sales of similar properties, and both Rockford and Harlem townships’ assessors say challengers frequently use vacant stores with deed restrictions that prevent similar uses from taking hold in constructing their arguments for a reduction.

“There’s not enough light shed on that in my personal opinion,” Crowley said. “If you sell an old Home Depot because you want to move, and you put a deed restriction that Lowe’s can’t move into that location, well then what are you going to use it for? It affects the value of the sale of that vacant big box.”

In part of its argument for lowering the value of its grocery store at 6410 E. State St., Schnucks’ attorneys argued that big box stores have become less valuable because of the shift to more online retail. That makes properties the size of Schnucks less valuable, it argues.

“Big box retail has fallen out of favor with investors,” Robert Becker of R.D. Becker Valuation wrote in its complaint form.  “As internet shares continue to capture more market share, brick and mortar retailers have struggled to reduce footprint in order to compete with online retailers more efficiently.”

Schnucks has requested a $1.9 million reduction to the taxable value assessor put on the property at 6410 E. State St. in Rockford. (Photo by Kevin Haas/Rock River Current)

The taxable value for that property increased by more than $200,000 in the past year to $2,874,830. Taxable value is one-third of a property’s fair-market value. However, Schnucks has argued the value should be about $966,500. The company paid about $323,000 in property taxes on that site last year. It would be about $118,000 at the same rate if the request for a reduction in value is granted.

A hearing over the East State Street property is scheduled to begin today at 9:30 a.m. The Roscoe property goes to the Board of Review on Feb. 7 and the Loves Park property on Feb. 16.

“After careful review, we have challenged the three assessments in Winnebago County because we believe the real estate values on which they are based increased beyond what is reasonable based upon the real estate market and comparable values in each respective area,” Schnucks said in a statement.

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‘A pretty big discrepancy’

The Schnucks on Harlem Road in Loves Park was sold for $16.1 million on April 8, according to records from the Winnebago County Clerk & Recorder’s Office.

It’s a price that included the freezers, registers and other equipment inside the property. Because of that, the property value from assessors won’t be as high as the sales price on the deed. However, the gap between what assessors and the company say the property is worth is about $6.5 milion.

Vaiden said an appraiser hired by Harlem Township assessed the property at about $9.5 million.

“But their appraisal came in at $3 million,” he said.

“I just don’t understand how we can have a local appraiser coming in at $9.5 million and an out-of-town appraiser for the appellant coming in at $3 million,” Vaiden said. “$6.5 million between two professionals seems like a pretty big discrepancy.”

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There were similar gaps with Meijer in Machesney Park, he said. The company had its property appraised at $8.5 million, but the township’s appraiser valued it at $11.85 million.

“There’s not a whole lot the assessor can do because you don’t see grocery stores up for sale,” Vaiden said. “I don’t know how much longer that they’re going to continue to use these comparables, but it’s just killing us as far as these big box stores go.”

The board will hear arguments on the Meijer property Feb. 14.

Schnucks, 4860 Hononegah Road in Roscoe, is shown on Thursday, Jan. 5, 2023. (Photo by Kevin Haas/Rock River Current)

In arguing that the Hilander Village Shopping Center in Roscoe is overvalued, attorneys said the multitenant property that is anchored by Schnucks has few other businesses that could fill it in the future.

That property at 4860 Hononegah Road was purchased for $9.3 million in 2014 as Schnucks took over the store from the former Hilander. About 90% of the storefronts in the center were occupied as of April, according to documents submitted in the challenge.

Schnucks is asking for a nearly $1.5 million reduction on its assessed value.

“Given the outbreak of COVID-19, additional store closures could put further pressure on rental and occupancy rates in the area, including the subject property,” Sage Commercial Advisory wrote on behalf of Schnucks in its appraisal submitted to the board. “The subject unit currently occupied by Schnucks is large in size and will have a limited pool of users for future tenants.”

Fewer challenges

The major challenges from grocery stores come as the total number of complaints have fallen to the lowest level in records we have going back to 2005.

That’s largely due to a record-setting housing market that saw home sale prices skyrocket in the past year.

“Such a strong residential market has made it so that it’s very challenging to find good evidence to grant a reduction,” Crowley said.

There were 567 total complaints representing 665 parcels submitted to the Board of Review this year. There were 750 challenges in 2021 and about 950 in 2020. The peak came in 2011, about three years after the housing market collapse triggered the Great Recession. There were more than 7,400 challenges that year.

The total value of those reductions if granted stands at $43.89 million. The value of all property in the county is about $5.8 billion without factoring in the results of the challenges. It was $5.35 billion a year ago.

The 5 largest reduction requests in Winnebago County

Total value of reduction requested | Property location

$2,191,883: Schnucks, 1810 Harlem Road, Loves Park

$1,908,260: Schnucks, 6410 E. State St., Rockford

$1,788,975: Meijer, 1770 W. Lane Road, Machesney Park

$1,478,367: Multitenant anchored by Schnucks, 4860 Hononega Road, Roscoe

$1,466,010: NorthPointe Wellness (Beloit Memorial Hospital Inc.), 5605 E. Rockton Road, Roscoe

Source: Winnebago County Supervisor of Assessments

This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on Twitter at @KevinMHaas or Instagram @thekevinhaas